An investment fund created with funds from a portion of an employee’s and/or employer’s wages and profits for the purpose of providing a salary when an employee retires. They are, mainly, focused on long-term returns (in the 20-40 year time frame). Companies, governments, unions, and other organizations can all create or contribute to pension funds.
Because they are worth so much money, pensions funds for large companies and governments can exert a tremendous economic power. The influence of large pension funds, mutual funds, and other major investments in businesses creates an effect called Universal ownership, in which a few economic organizations, effectively, represent society as a whole and are concerned with the performance of industries or the economy as a whole (and not only about any individual company or investment).
The long-term investment strategy of pension funds work well with sustainability concerns. In California, CALPERS, the state pension fund, has been investing in businesses and governments that have long-term, sustainable growth potential, and limit their liabilities with good governance, ethics, and social as well as environmental compliance. These organizations offer the better long-term growth, as opposed to short-terms gains that are less attractive for pension funds.